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7 Financial Habits of Successful Business Owners

Successful small business owners make financially sound decisions and follow these seven best practices.

1. Regularly review your finances

Review your company’s finances weekly or monthly to understand if and how your business is growing. Keeping an eye on finances can help you ensure you have enough cash on hand to pay your staff, lenders, and vendors.

2. Maximize your tax write-offs and deductions

Take advantage of every tax benefit available to you. By maximizing your write-offs and deductions, you’re reducing your taxable income. So, you’ll decrease how much you owe in taxes.

Read also: 4 Tax Deductions You Don’t Want to Miss

3. Save funds for taxes

Put aside money for taxes immediately, so you’re not blindsided or fined come tax time. If you have employees, set aside payroll taxes every time you run payroll. For your business income, it’s a good idea to set aside at least 90% of last year’s taxes or, if you’re a new business, 30 cents from every dollar your business earns.

4. Proactively reduce your debt

If your company has any liabilities, make consistent payments and reduce the principal amount by paying more than the minimum due each month.

Read also: 7 Tips for Becoming Debt Free

5. Maintain a budget

Sticking to a budget will help you make more informed decisions and identify potential problems early. Create a budget at the beginning of each month based on your estimated revenue and expenses. At the end of the month, compare your budgeted amounts to your actual numbers. Eventually, you’ll be able to make better predictions to ensure you know exactly what’s coming in and going out of your business.

Read also: How to Set a Budget for Your Small Business

6. Keep personal and business expenses separate

As a small business owner, it can be easy to mix your personal and business expenses. By keeping them separate, however, you can avoid tax issues, personal liability, and jumbled accounting issues.

7. Pay yourself

An easy way to keep your personal and business expenses separate is to pay yourself regularly. This forces you to separate your personal and business costs and will encourage you to keep a budget in your own life, too. Learn more about how to pay yourself as a small business owner.